Domestic Borrowing Limits: Finance Minister's Powers 2026

The landscape of Moroccan public finance is undergoing a sophisticated transformation as we head into 2026. For business owners, institutional investors, and legal scholars, understanding how the state manages its liquidity is not merely an academic exercise—it is a window into the country’s macroeconomic stability. Imagine a scenario where a large-scale infrastructure project, such as the expansion of the high-speed rail network or the development of green hydrogen facilities, requires immediate funding. The Moroccan government does not simply print money; it enters the financial markets.

But who holds the "checkbook"? Under what legal authority can the government borrow billions of Moroccan Dirhams from domestic banks and insurance companies? In 2026, the answer lies in a complex web of delegated powers centered around the Minister of Economy and Finance. This article provides an exhaustive legal analysis of domestic borrowing limits, the specific powers granted to the Minister under Decree No. 2.25.851, and the structural framework of the 2026 Finance Act.

By the end of this guide, you will understand the precise legal mechanisms that allow the Moroccan Treasury to issue debt, the role of interest rates in public policy, and the strict ceilings that prevent fiscal overreach.

Legal Foundation: The Pillars of Public Debt in Morocco

The authority to borrow is not inherent to the executive branch; it is a power strictly regulated by the Constitution and delegated annually through the Finance Law. In Morocco, the legal architecture for domestic borrowing is built upon several key texts.

1. The Organic Law No. 130-13 (LOLF)

The Organic Law No. 130-13 relating to the Finance Law is the "constitution" of Moroccan public finance. It dictates how the state budget is prepared, voted upon, and executed. Crucially, it establishes that only a Finance Law can authorize the government to borrow. Without this annual authorization, any debt issued by the Treasury would be legally void.

2. The 2026 Finance Act (Loi de Finances)

Each year, the Finance Act sets the "ceiling" for borrowing. For the 2026 fiscal year, the government has projected a gross financing requirement of approximately MAD 144 billion. This is codified in the annual Finance Act, which explicitly grants the government the right to issue domestic debt to cover the budget deficit and manage the Treasury's cash flow.

3. Decree No. 2.25.851: The Delegation of Power

While the Parliament approves the principle of borrowing, it does not manage the day-to-day auctions of Treasury bonds. This is where Decree No. 2.25.851 comes into play. This decree delegates specific authority to the Minister of Economy and Finance to:

• Issue domestic loans (Treasury Bonds).
• Negotiate interest rates with primary dealers.
• Utilize "active management" techniques for the internal debt.

4. Article 42 and 43 of the Finance Law

As seen in previous iterations like the Finance Law 2023 (Article 42), the government is authorized to "finance through the issuance of internal borrowings and the use of any other financial instrument to meet all Treasury costs." Article 43 further empowers the government to perform "active management" of the internal debt to optimize costs and maturities. These provisions are mirrored in the 2026 legal framework to ensure continuity in debt servicing.

5. Law No. 36.87 and Institutional Subscriptions

Historically, Law No. 36.87 (as referenced in Dahir No. 1-87-143) established the framework for mandatory or encouraged subscriptions by banking institutions. In 2026, while the market is more liberalized, the principle remains: the Minister of Finance has the legal standing to determine the procedures, durations, and interest rates for these domestic instruments.

Practical Guide: How Domestic Borrowing is Executed in 2026

Understanding the law is one thing; seeing it in action is another. The process of domestic borrowing in Morocco is a highly regulated, rhythmic cycle involving the Treasury and External Finance Department (DTFE).

Step 1: Authorization and Ceiling Setting

Before the year begins, the Parliament votes on the 2026 Finance Act. This law sets a "ceiling" for domestic debt. For 2026, the government aims to keep the total public debt-to-GDP ratio below 70%, with a target of 65.9% in the medium term. This ceiling is a hard legal limit that the Minister cannot exceed without returning to Parliament for a supplementary finance law.

Step 2: The Issuance Calendar

The Minister of Finance, acting under the authority of Decree No. 2.25.851, publishes an annual and monthly calendar for Treasury bond auctions. These auctions are the primary vehicle for domestic borrowing.

Step 3: The Auction Process (Adjudication)

Domestic borrowing is typically conducted through an auction system where "Primary Dealers" (IVTs - Intermédiaires en Valeurs du Trésor), such as major Moroccan banks (Attijariwafa Bank, BCP, etc.), bid on government bonds.

• Required Documents: The DTFE issues an "Avis d'appel d'offres" (Tender Notice).
• Interest Rates: The Minister, through the DTFE, decides which bids to accept based on the interest rates offered. If the rates are too high, the Minister may reject all bids to protect the state's finances.

Step 4: Settlement and Listing

Once the auction is finalized, the results are published on the website of the Ministry of Economy and Finance and the mahakim.ma guide 2026 portals for legal transparency where applicable. The bonds are then settled through Maroclear, the central depository.

Costs and Timelines

• Timelines: Auctions typically occur weekly (usually Tuesdays).
• Costs: The cost to the state is the "coupon" or interest rate paid to investors. In 2026, these rates are influenced by the Central Bank's (Bank Al-Maghrib) monetary policy.

Key Provisions Explained: Minister's Powers and Debt Limits

To navigate the 2026 fiscal year, one must understand the specific legal "tools" at the Minister's disposal.

Active Debt Management (Article 43 Framework)

The Minister is not just a passive borrower. Under the legal framework of Article 43, the Minister has the power of "Active Management." This means the Treasury can buy back expensive old debt and replace it with new, cheaper debt if interest rates drop. This is a crucial power for maintaining the sustainability of the domestic borrowing portfolio.

The 40% and 10% Rules in Real Estate Funds

While the state borrows for the budget, it also regulates how other entities borrow. For instance, Law No. 70.14 (Article 69) provides a comparative look at borrowing limits. It stipulates that Real Estate Collective Investment Schemes (OPCI) can borrow up to 40% of their asset value for investments and 10% for cash flow needs. While this applies to private funds, it reflects the Moroccan legislator's obsession with "prudential limits"—a philosophy that also governs the Minister's approach to national debt.

State Guarantees

The Minister also has the power to grant state guarantees for loans taken by public enterprises. As seen in Decree No. 2.86.569, the state can guarantee loans for specific projects (e.g., tourism development) up to specific amounts (e.g., MAD 10 million in that historical context). In 2026, these guarantees are strictly monitored to ensure they do not become "hidden" public debt.

The Role of Interest Rates

Under Decree 2.25.851, the Minister of Finance has the discretion to set the "price" of debt. However, this is not arbitrary. The Minister must balance the need for cheap funding with the need to keep the Moroccan banking sector healthy. If the state borrows too much at high rates, it "crowds out" the private sector, making it harder for SMEs to get loans. For more on business financing, see our guide on Movable Asset Law Explained: Morocco 2026 Update.

Common Mistakes & How to Avoid Them

When dealing with public debt and domestic borrowing, several misconceptions can lead to legal or financial errors for investors and observers.

1. Confusing Gross vs. Net Borrowing

A common mistake is looking at the MAD 144 billion figure for 2026 and assuming the debt is increasing by that amount. In reality, a large portion of this is used to "roll over" or pay back maturing debt. The net borrowing (the actual increase in debt) is much lower and is tied directly to the fiscal deficit target of 3% of GDP.

2. Ignoring the "Ceiling"

Investors sometimes assume the Minister has unlimited power. However, the 2026 Finance Act provides a hard cap. If the government reaches this cap, it cannot legally issue more bonds without a new law. This provides a "safety valve" for the Moroccan economy.

3. Overlooking the Impact of International Ratings

While we are discussing domestic borrowing, the Minister's powers are indirectly limited by international rating agencies (S&P, Fitch). If the Minister uses their power under Decree 2.25.851 to borrow excessively, Morocco's credit rating could drop, leading to higher interest rates domestically.

4. Misunderstanding the Role of the Central Bank

Some believe the Minister can force Bank Al-Maghrib to fund the government. Under the Statutes of Bank Al-Maghrib, the central bank is independent and generally prohibited from providing direct credit to the state. The Minister must borrow from the market, not the printing press.

Conclusion with Key Takeaways

The legal framework governing domestic borrowing in Morocco for 2026 is a testament to the country's commitment to fiscal discipline and institutional transparency. Through the delegation of powers via Decree No. 2.25.851 and the strategic mandates of the 2026 Finance Act, the Minister of Economy and Finance wields significant but strictly bounded authority.

By utilizing tools like "Active Debt Management" and adhering to debt-to-GDP ceilings, the Moroccan state ensures that its financing needs—projected at MAD 144 billion—are met without compromising long-term stability. For legal professionals and investors, staying abreast of these decrees and the annual Finance Law is essential for navigating the Moroccan financial market.

Summary of Key Insights:

• Delegated Authority: The Minister of Finance operates under specific annual delegations (Decree 2.25.851) to manage domestic debt.
• Legal Ceilings: Borrowing is capped by the Finance Act, targeting a deficit of 3% of GDP in 2026.
• Market Mechanism: Domestic borrowing is conducted through competitive auctions with primary dealers, ensuring market-driven interest rates.
• Active Management: The law allows the Treasury to refinance old debt to optimize the state's interest burden.

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